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By Jennifer Yousfi
Jim Rogers has a knack for knowing which way the investment winds will blow. He's been profiting off that rare gift for years. He predicted the global commodities boom we're experiencing over a decade ago. He's been short on the struggling Wall Street investment banks for months.
And now he's predicting recession.
"I'm extremely worried," he said in a recent phone interview with Fortune. "I have been for a while, but I just see things getting much worse this time around than I expected."
Rogers feels the Federal Reserve is being fiscally irresponsible by slashing interest rates every time the market calls for it. Without some "fiscal discipline" it could be worse than a simple recession.
"Conceivably we could have just had recession, hard times, sliding dollar, inflation, etc., but I'm afraid it's going to be much worse," he said. "Bernanke is printing huge amounts of money. He's out of control and the Fed is out of control. We are probably going to have one of the worst recessions we've had since the Second World War. It's not a good scene."
With the Fed adding so much liquidity to an economy that's already suffering from inflationary pressures, Rogers sees a repeat of the conditions that lead to stagflation in the 1970s.
"[Stagflation] is a real danger and, in fact, a probability," he said.
Rogers has been bullish on China for years. This past December, Rogers both published his latest book, "A Bull in China: How to Invest Profitably in the World's Greatest Market," and moved his family full-time from Manhattan to Singapore, so he could be close to the many investment opportunities in Beijing and Shanghai. [To see how you can obtain a free copy of Jim Rogers' latest bestseller, "A Bull in China: Investing Profitably in the World's Greatest Market," please click here.]
Despite his fears for the U.S. economy, Rogers still thinks China is ripe with investment opportunities as the People's Republic continues to decouple from the United States.
"Anybody who sells to Sears (SHLD) or Wal-Mart (WMT) is going to be affected, without question," he said. "Some parts of the Chinese economy are going to be untouched, however. They won't even know America's in recession. They won't care if America falls off the face of the earth."
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'It's going to be much worse'
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Investing Guru Jim Rogers Predicts "Worst" U.S. Recession in Years; Urges Investors to Shift Into Commodities